The FTSE 100 has opened higher again this morning as shares in banks rose yesterday following the US announcement of its toxic asset plan.
The US Treasury announced yesterday that the toxic asset plan will soon begin, and could total $1trillion over time, buying up bad assets and potentially easing the global credit flow.
The announcement follows the UK's quantitative easing scheme, which could buy up to £150billion worth of assets, with fresh funds.
As a result of the US package, shares
in UK banks increased yesterday, and Barclays, Lloyds Banking Group and RBS
helped to push the FTSE
100 closer to the 4,000 mark.
Commenting yesterday, Joshua Raymond, market strategist at City Index said: "Barclays
, RBS and Lloyds
are all higher today as the US plans to cleanse $1trillion of toxic assets from bank balance sheets."
He added: "Investors have responded positively to US plans to cleanse toxic assets from bank balance sheets and it has added a second wave to market gains seen over the last few weeks."
However, the scheme's success is still a long way off, says Brian Bethune, economist at Global Insight, "We would not expect transactions under the loan program until perhaps late in the second quarter. And it could be late in the third quarter before the legacy securities program starts to see transactions.
"Overall, however, one ray of light to the resolution of the financial crisis is better than no ray at all, and markets gave this next phase of the program a relatively enthusiastic endorsement," he said.
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